COT: Growth concerns weigh on all sectors

Buying of WTI and selling of Brent continued as the spread between the front month contracts has dropped below $4/b from above $10/b back in early June. While WTI has benefited from new pipelines transporting crude away from Cushing, the delivery hub for WTI futures, Brent crude, the global benchmark, has suffered relatively more due to the mentioned growth and demand concerns. 

In the agriculture space grains were mixed following the August WASDE report which helped sent corn sharply lower while soybeans got some relief from Trump’s decision to delay the 10% tariff hike on some products until December.  In soft commodities cocoa, sugar and coffee were all sold amid ample supply and demand worries

What is the Commitments of Traders report?

The Commitments of Traders (COT) report is issued by the US Commodity Futures Trading Commission (CFTC) every Friday at 15:30 EST with data from the week ending the previous Tuesday. The report breaks down the open interest across major futures markets from bonds, stock index, currencies and commodities. The ICE Futures Europe Exchange issues a similar report, also on Fridays, covering Brent crude oil and gas oil.

In commodities, the open interest is broken into the following categories: Producer/Merchant/Processor/User; Swap Dealers; Managed Money and other.

In financials the categories are Dealer/Intermediary; Asset Manager/Institutional; Managed Money and other.

Our focus is primarily on the behaviour of Managed Money traders such as commodity trading advisors (CTA), commodity pool operators (CPO), and unregistered funds.

They are likely to have tight stops and no underlying exposure that is being hedged. This makes them most reactive to changes in fundamental or technical price developments. It provides views about major trends but also helps to decipher when a reversal is looming.